The Million Dollar Idea

I was visiting with my in-law this weekend and we decided to watch some "I love Lucy" episodes. We all love Lucy, I think it's a fantastic show and I love to watch Lucy get herself in to these crazy situations. I laugh and think about how silly she was to even think that was going to work out the way she thought.

I found this particular episode relevant to etsy sellers though. It is called the Million Dollar Idea.

Lucy decides to bottle her amazing salad dressing and sell it for $0.40 a jar.

To market it she phones a friend who's husband has a TV show and promises her $0.03 a jar of the total profit if she can have an 5min spot.

The orders come rolling in.

Lucy and Ethel are creating their dressing when Ricky ask them how much it cost to make their product. They look at each other and realize that they have no idea. So Ricky does the math. Without factoring in shipping they are making $0.03 a jar to which they have to turn around and give to their friend who snagged them the TV slot.

It is a wonderful reminder to all of us about the importance of pricing and planning.

There are all kinds of websites and handbooks about pricing, but I just use this model:

Time to create x Your Hourly Rate + Materials = Gross Profit

Gross Profit - Etsy Fees - PayPal Fees - Shipping - Packaging = Net Profit

I also take into account that there are some items in which I sell for a little bit more so that I can afford to sell some items for a little less.

Go forth and watch Lucy's Million Dollar Idea!

-LB